SEATTLE, April 25, 2017 /PRNewswire/ -- A Place for Mom (www.APlaceforMom.com), the nation's largest senior living referral service, today released findings from its 2017 National Senior Living Cost Index. The new report shows the growth of costs for Assisted Living and Memory Care contradicts public perception about the skyrocketing costs of health care, and that senior living costs more broadly are growing at rates similar to housing rents.
"While public perception is that health care costs are increasing at breakneck speed, our research finds that Assisted Living and Memory Care costs for consumers are growing slowly, at 2.9 and 2.3 percent per year respectively in 2016. That amounts to about $110 per month in both cases," said Charlie Severn, vice president of brand marketing at A Place for Mom. "This is good news for the senior living industry and consumers."
A Place for Mom found that costs for these types of care rose about 2 percent per year (about $62 per month) on average since 2012. Adjusting for inflation, costs grew just under 1 percent annually ($19 per month in 2016 dollars) on average since 2012. Senior living cost growth is slower than that of health insurance premiums and hospital service costs, much slower than recent home sale price growth and on par with national rent growth.
In addition to analyzing senior housing costs and cost growth, A Place for Mom surveyed senior living consumers about the characteristics of neighborhoods and senior living communities most important to their senior living purchase decisions. Throughout the year, the company will look at how these consumer preferences relate to senior housing costs.
Cost Growth Slows in the Southern U.S., But Speeds Up Everywhere Else
Senior living cost growth accelerated across U.S. regions as the economy recovered, especially in the Southern and Western states, which were hit hardest by the Great Recession. Yet in 2016, growth slowed in the South, possibly a sign that the recovery's impact on older consumers has diminished, although it's too early to tell for sure.
Cost Growth Accelerates, But Not Because of Care Costs
Despite public perception, health care cost growth slowed in recent years, with the notable exception of prescription drug costs. In contrast, rent and real estate price growth has accelerated as the economy improves. Independent Living – the type of care most similar to rental and real estate markets because all costs are rent-related – shows the fastest acceleration in cost growth compared to Assisted Living and Memory Care, the costs of which are a mixture of rent and care.
A major reason for cost growth acceleration is likely the same as for rents and home prices: economic recovery. Assisted Living and Memory Care were shielded somewhat from the recession by the greater urgency of consumer care needs, and possibly by the recent deceleration of health care cost growth. For that reason, the Assisted Living and Memory Care markets have not grown as much. For Memory Care, about half of the costs go toward care, and there is no clear evidence of cost growth acceleration. Finally, there has been an increase in Memory Care capacity in recent months, which is likely contributing to the lack of cost growth acceleration.
Senior Living Cost Growth Mirrors the Rental Market
A Place for Mom also found that cost growth in the senior living market is more like the rental market than the residential real estate market. According to the Zillow Rent Index, national annual rent growth hovered from 2 to 5 percent between 2013 and 2016, similar to growth in senior living costs. In contrast, national home sale prices, according to real estate brokerage Redfin, have grown at least twice as fast.
"The growth in home values may be especially helpful to older Americans," said Severn. "Many of these folks have significant equity in their homes, and at some point, plan to sell them as a source of funding to pay for senior housing and independent living, assisted living or memory care. The findings from our report should be reassuring to these homeowners."
Metro areas with hot rental markets also tend to have the fastest growing senior living costs. In 2016, the top five metro areas in terms of average monthly Zillow Rent Index were Seattle, Portland, Sacramento, Denver and San Diego. Four of these metro areas are also in the top-five list for the fastest growing costs for at least one of the major types of senior housing and care.
Top 5 Fastest Growing Metro Markets (2016 Percent Cost Growth)
Underlined markets appear in the top 10 for both housing rents and senior living costs.
Portland, OR (8.3)
Sacramento, CA (5.8)
Denver, CO (5.3)
San Diego, CA (4.7)
Seattle, WA (8.1)
Minneapolis, MN (7.5)
Phoenix, AZ (5.5)
Chicago, IL (3.4)
Los Angeles, CA (3.3)
Denver, CO (10.3)
San Diego, CA (9.1)
Chicago, IL (2.7)
Sacramento, CA (3.9)
New York, NY (3.6)
San Diego, CA (6.0)
New York, NY (5.1)
Phoenix, AZ (3.2)
Chicago, IL (2.7)
Minneapolis, MN (1.3)
Senior Housing Planning Tool Improvements
To help families navigate senior living cost trends in their area, A Place for Mom also unveiled a more precise, user-friendly interactive map, which allows families to search for senior living costs in over 2,000 cities, metros and states across the United States.
"We're committed to continuously improving our resources for finding senior care," said Ben Hanowell, data scientist at A Place for Mom.com. "Earlier this year we made enhancements that enable people to search a map of the U.S. to see senior living costs in their area and compare it to options in other cities."
In addition to providing consumers with an interactive map, A Place for Mom has updated its interactive tool to include cost estimates for senior apartments, which can be a more affordable alternative for independent seniors who don't want amenities like dining, light housekeeping or scheduled activities included in their rent.
Access A Place for Mom's updated senior housing planning tool here.
June 2017 Study to Focus on Critical Neighborhood Considerations
A Place for Mom asked approximately 1,000 senior-living consumers what characteristics of neighborhoods and senior living communities would have the most influence on a decision to move. Neighborhood factors include crime rates, public transit access and proximity to amenities like grocery stores, dining, public parks and cultural centers. Senior-living community factors include quality of care, affordability, cleanliness, friendliness of staff and scheduled activities.
The survey found that low crime rate, proximity to hospitals and proximity to family are the most critical neighborhood factors. Moreover, the quality and affordability of the community are more important to consumers than the neighborhood. Yet the majority of senior living consumers, including those looking for Assisted Living, would prefer to live in more walkable neighborhoods with better public transit access.
In June, A Place for Mom will release the full results of this study, including how consumer preferences vary by consumer segment and type of care. Later this year, in partnership with Walk Score, a Redfin company, and SeniorAdvisor.com, a senior living ratings and reviews site, A Place for Mom will look at how walkability and consumer ratings relate to senior living costs at the local level. The impact of walkability on senior living costs is relevant to consumers and policymakers given the obvious health benefits of daily physical activity.
The Senior Living Cost Index is based on actual rent and care charges collected from referred family move-ins to A Place for Mom community partners. National and regional median costs and growth estimates are based on communities with at least one move-in for a given care type two years in a row. The index reports the median cost and annual changes across communities based on their annual median move-in charges for each care type.
Cost and cost growth estimates are available at various geographic levels in our fully documented public data repository. Although just over 2,200 cities are shown on the map, the data repository has data on over 3,300 cities, as well as data at the ZIP-code, county, metro, state, regional and national level.
ZIP-code, city, county, metro, and state estimates are based on a proprietary machine learning algorithm that models inflation-adjusted move-in charges (in 2015 dollars) during 2015 and 2016. ZIP codes with a small number of move-ins borrow information about costs from other zip codes with similar median household income, similar proportion of adults 55 or older and geographic proximity. Cost estimates in each location are a weighted average of zip code-level estimates. Zip-code weights are based on 2014 American Community Survey population counts of persons over age 55.
Median household income and older population counts are based on the 2015 five-year estimates from the American Community Survey.
Annual home price growth is based on the annual average median home price available from the Redfin Data Center. Housing rent growth is based on the annual average Zillow Rent Index. Inflation estimates are based on the monthly Consumer Price Index for All Urban Consumers – all Items, available from FRED, with inflation adjustment factors calculated relative to the average index value for 2016.
Texas and Oklahoma estimates are unavailable, as APFM does not collect monthly care and rent charges due to state regulations.
Cost estimates are available at the ZIP-code and county level for interested parties, although ZIP-code estimates may not be as accurate. Estimates are also available by request for smaller senior living communities most often located in private homes in residential neighborhoods and known variously as Residential Care Homes for the Elderly (in California), Adult Family Homes (in Washington State), Assisted Living Homes or Assisted Living Centers (in Arizona), Residential Care Facilities (in Oregon), and as Residential Care Homes or Group Homes in other areas.
About A Place for Mom
A Place for Mom, Inc., is North America's largest senior living referral service with more than 400 senior living advisors providing resources and personalized assistance in finding senior living options. A Place for Mom works with a nationwide network of over 17,000 providers to help families find options based on a loved one's stated needs, preferences and budget. This may include independent senior housing, home care, residential care homes, assisted living communities and specialized Alzheimer's memory care. The service is offered at no charge to families as providers pay a fee to A Place for Mom. For more information, visit www.aplaceformom.com, call 1-877-311-6099 or visit one of A Place for Mom 's social networks at Twitter, Facebook, Google +, Senior Living Blog and Pinterest.
SOURCE A Place for Mom